What will superstar contracts look like in NHL as salary cap spikes?
While it’s debatable what will happen to the mid-to-lower tier class of players in the league, or how many teams will be able to push the upper limit of a sky-rocketing cap, it’s a good bet that the superstars will rise with the tide.
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The game is about to change.
In the 20 years the NHL has had a salary cap, the biggest single-season increase has been $6.3 million. But last week the league and the PA released salary cap estimates over the next three years, and those projections will significantly alter the economic reality for both teams and players. Next season the cap will rise by $7.5 million, then $8.5 million the year after, and another $9.5 million in 2027-28. In all, that will be a $25.5 million increase over three seasons — it took the league eight years to climb that much from its original salary cap in 2005-06.
And there’s a chance these projections are low.
|
SEASON |
SALARY CAP |
|
2024-25 |
$88 million |
|
2025-26 |
$95.5 million |
|
2026-27 |
$104 million |
|
2027-28 |
$113.5 million |
While it’s debatable what will happen to the mid-to-lower tier class of players in the league, or how many teams will be able to push the upper limit of a sky-rocketing cap, it’s a good bet that the superstars will rise with the tide.
When we look at newly signed NHL contracts, the best way to compare them is by looking at the cap hit percentage at the time the deal was struck. As the cap has risen, this is the best way to contextualize inflation and explain salary increases.
As players sign new contracts now and in the seasons to come, this context will be important to consider. Salaries should rise quickly and throw old comparables out the window. A $5 million cap hit today (5.68 per cent) is equal to about a $6.5 million cap hit against a $113.5 million upper limit. Likewise a $10 million cap hit today (11.3 per cent) is equal to about what a $12.9 million cap hit will be in 2027-28.
In the meantime, deals signed in the recent past will also take a new form. As the cap rises, the burden of today’s contracts will become less and less. If a player is on a $5 million contract today that runs another three or more years, that AAV will be equivalent to a $3.9 million cap hit in 2027-28.
The most noticeable area of this shift will be seen on the most expensive star contracts though. Just take a look at the following three contracts, all within the top five most lucrative today, and what their equivalent value will be under a rising cap.
• With J.T. Miller traded, the pressure will turn up on Elias Petterson, and rightfully so. Currently the fifth-highest paid player in the league by AAV ($11.6 million), Pettersson is in the first year of an eight-year contract that is the richest ever signed in team history.
• The pressure will always be there when a player is being paid this much by an organization but, over time, his burden on the salary cap becomes much less so. In the third year of Pettersson’s contract, his cap hit percentage would be equivalent to a $9.8 million deal today — comparable to Tyler Seguin or Sebastian Aho. By the time Pettersson’s deal is only halfway over his contract value will be comparable to a $9 million AAV today, on par with Cale Makar and Kirill Kaprizov, who had RFA seasons bought up, and Jake Guentzel, the prized winger in last summer’s UFA class. A $9 million AAV today ranks 34th across the entire league.
• Unless a new star joins the fray, Pettersson stands to be Vancouver’s most expensive player until Quinn Hughes comes due for unrestricted free agency in 2027. Great timing for him as that’s just ahead of the season in which the cap shoots up to $113.5 million. If we look at the highest-paid NHL defenceman today, Erik Karlsson at $11.5 million, and project that current cap hit percentage (13.06) on Hughes, his next contract could come in around $14.8 million. That might be a conservative estimate.
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• When he was a prospect, Auston Matthews took a different path than most others by playing out of Switzerland in his draft year. As a pro, he’s approaching his contracts differently, too. Rather than sign for maximum term, Matthews signed a five-year deal in 2019 out of his entry-level contract, followed by a four-year contract in 2023. This is to maximize his career earnings and take full advantage of the rising salary cap and it’s about to become more apparent than ever.
• Currently the highest-paid player by AAV in the league, the relative value of Matthews’ contract will decline as any other when the cap rises to new heights. In the third year of his contract he’ll be paid similar to how David Pastrnak is this season, and in the last year of Matthews’ deal he’ll be similar to what Jack Eichel is currently making.
• But rather than keep declining, Matthews will be eligible for an extension after that season, putting him back in line to be one of, if not the, highest-paid player by AAV in the league. Matthews will be eligible to sign an extension when the salary cap is $113.5 million, but it won’t kick in until the upper limit rises again.
• Nathan MacKinnon was the highest-paid player in the league for a short period of time before Leon Draisaitl passed him. MacKinnon’s extension followed him being on one of the best value deals in the league, a $6.3 million AAV signed way back in 2016. He may not be the best value ever again ($12.6 million will never be a small sum and he’ll be 30 years old next season) but by the time he’s 32 years old and in the fifth year of an eight-year contract MacKinnon’s deal will be equivalent to a $9.8 million AAV today.
• Colorado’s “internal cap” may have been one reason why they traded away Mikko Rantanen in his contract season because inflation gives him a case to surpass MacKinnon’s $12.6 million AAV. But that won’t be able to stand forever. Cale Makar comes up for free agency in 2027, the same year as Quinn Hughes. It will be fascinating to see which of those two star defencemen signs first to set the market. It’s not impossible that one of them pushes for a $15 million AAV… or more.
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WHAT WILL THE NEW HIGHEST CONTRACTS LOOK LIKE?
Right now, the highest cap percentage on a newly signed deal was Connor McDavid‘s, whose contract accounted for 15.72 per cent of the cap when it was signed in 2017. Today, against an $88 million cap, his $12.5 million cap hit accounts for 14.2 per cent of the upper limit.
Other comparables for high-end deals include MacKinnon (15.09 per cent of the cap when signed), Matthews (15.06) and Draisaitl (14.66).
If we take 15 per cent as roughly the high-end for the next wave of stars who will sign extensions, those AAVs would come in at $14.325 million, $15.6 million and $17.025 million over the next three years. A 16 per cent AAV in 2027-28 when the cap is projected to be at $113.5 million, equals $18.16 million.
That major change is coming and will be led again by McDavid, due for a contract in 2027, as are Kirill Kaprizov, Jack Eichel and Artemi Panarin. Makar and Quinn Hughes follow the season after.
Connor Bedard is due his first extension in 2027 and Macklin Celebrini in 2028. What will they pull, knowing that four RFA seasons still need to be bought up? What will the climate be when those two are UFA eligible down the line? Will they take Matthews’ lead, or sign for maximum term?
Unless someone pushes for new heights in cap hit percentage, we’re still likely a few years away from an individual player having a $20 million cap hit. But at this rate, that possibility is coming in the next decade.
